BLOG: Measure 97; the hidden sales tax on steroids

BLOG: Measure 97; the hidden sales tax on steroids

Ballots are showing up in mailboxes across the state, so it’s a good time to remind everyone why the Portland Business Alliance is one of more than 26,000 coalition members in Oregon opposed to Ballot Measure 97. 

Measure 97 would be the largest tax increase in Oregon history. The proposal is a 2.5 percent tax on the sales, not the profits, of C-Corporations with more than $25 million in sales, and it would raise $6 billion in the next two-year state budget cycle, $3 billion per year. This would mean a 30 percent increase in the state general fund. 

The proponents of this measure want Oregonians to believe that somehow the state will magically be able to raise $6 billion in new revenue, and no one will feel the impact. There is no free money. That just doesn’t make sense. 

Even Gov. Kate Brown has admitted that Oregonians are “smart enough” to know that they will pay for this tax. I actually think we are way more than “smart enough.” I think we are very smart and we will not be lured by this deceptive promise of “free money.” 

The Oregon Legislative Revenue Office (LRO), the state’s own nonpartisan economists, have said that the largest share of the cost of this measure will be passed straight through to consumers in the form of higher prices. Food, electricity, gasoline, insurance, medical care, even medicine will be more expensive because of this costly and dangerous tax. 

The LRO projected that the average Oregon family of four will be hit with $600 a year in costs attributed to Measure 97, and low-income families proportionately will be hit the hardest. 

In addition, an economist hired by the proponents has called this kind of gross receipts tax a “sales tax on steroids” because of the unique way it will impact the price of products. Unlike a traditional sales tax, which is levied once at the final point of sale, the Measure 97 gross receipts tax can hit a single product multiple times as it moves from manufacture to final retail sale. The 2.5 percent tax can become 5 percent, 7.5 percent, 10 percent – even more if you consider compounding. Yes, with Measure 97 you will pay a tax on the tax. 

And unlike a traditional sales tax, there are no exemptions to this tax. Not one. So insurance, utility bills, food and medicine, typically exempted from a sales tax, will all be hit with this extra cost. But consumers won’t see it because the tax will be hidden in the cost of products they buy. 

Measure 97 is a hidden sales tax on steroids. 

At the Alliance, we certainly are sympathetic to the need to address school funding – which is why this organization has supported many, many school funding measures over the years – but we are troubled that there is absolutely no guarantee that the new revenue from Measure 97 will really go to schools. Legislators already are talking about how they will change the measure when they convene in January – and voters haven’t even had a chance to say what they think about it yet! 

The truth is, once that money hits the state coffers, legislators can spend it any way they want. Measure 97 is a $6 billion blank check for the politicians in Salem. 

And we are concerned about the loss of jobs. The LRO projected that 38,000 private-sector jobs will be lost if Measure 97 passes. It took Oregon a long time to get through the Great Recession and, while Portland is rebounding, many parts of our state still hurt. How can we support a tax that will reduce jobs, while creating new costs for working families? 

Every major newspaper in Oregon has opposed Measure 97 because it is bad policy that will hurt Oregonians. Farmers, small businesses, educators, community organizations and many, many others are part of our more than 26,000-member coalition to defeat the measure. Please consider joining us. 

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